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Europe was already facing a winter gas crisis. The risks just got even bigger

European natural gas futures ended almost 18% higher on Tuesday and rose again on Wednesday. UK wholesale prices also shot up. they go now back direction record seen levels in begin October, when some factories in Europe and the United Kingdom were closed because their activities had become unprofitable.

The unease reflects a growing uncertainty: as colder weather sets in, will the region in be able to obtain the energy die it needs power buildings and businesses and heat homes in the midst of a global reeling for fuel?

“Markets are incredibly nervous,” says Nikos Tsafos, an expert in energy and geopolitics in the centre for Strategic and International Studies in Washington DC “The Lack” of certification adds at die fear.”

Germany’s decision Don’t approve Nord Stream 2 for now because the pipeline manager is established in Switzerland seems to be established on a legal technical aspect. But the move will postpone the date when gas is expected to take place start flowing – a turning point that analysts have said is the energy shortages in Europe could decrease.

“The Timeline for the start of the pipe now seems longer than we initially expected,” Goldman Sachs strategists wrote in An research Remark.

They now predict that gas will start flows along the pipeline in February of 2022, although some analysts believe it will be even later. That means it cannot be counted on to increase the offer in the coming months, a period die used to be already is going to be a challenge.

“Nord Stream 2 is the pipeline die the offer may change game in Europe and tip the scales, so delays in its use means the current tight throttle market the conditions will last all winter,” says Carlos Torres Diaz, head of gas and power markets at Rystad Energy.

The importance of Nord Stream 2

The European Union gets about 40% of it is imported natural gas from Russia, and even if it moves to cleaner sources of energy, die dependence is expected remain intact.

Build of Nord Stream 2 of Gazprom, which is controlled by the Russian state, started in 2018 and was completed in September. To be set to supply 55 billion cubic meters of gas per year directly from Russia to Europe.

The pipeline has always been controversial because it bypasses Ukraine, making countries like the United States to warn it will increase Moscow’s influence in the region. But there was speculation that the approval process for operations to begin could be accelerated up as natural gas prices in Europe shot up higher because of weather patterns and a wave in demand when the lockdowns were lifted.

“Honestly, we don’t have enough gas at the moment. We don’t store” for the winter period,” Jeremy Weir, CEO of energy trading company Trafigura, told a conference hosted by the Financial Times this week. “So that’s why there’s a real concern that . if we have a cold winter that we are rolling blackcan have outs in Europe.”

Tsafos of CSIS said there was never much clarity on of gas from Nord Stream 2 could really alleviate the situation in the upcoming months. But the certification delay adds concerned that Russia won’t step up beyond its contractual obligations to supply gas to Europe at a difficult time, as some had hoped.

“Goods in a little more suspicious environment with what’s coming? out of Russia this winter,” Tsafos said.

Henning Gloystein of Eurasia Group said that the amount of gas coming to Europe from Russia this winter should not be affected, but acknowledged that the situation remains politically charged.

“By suspending the Nord Stream 2 approval process, German regulators and likely also it comes in new government signal they are not willing to bow to Russian pressure to fast-track approval for the pipeline,’ he said also signals [to] his allies in Poland, Brussels and in Washington that Berlin is not deaf to their criticism of the pipeline.”

What’s? next?

The development further obscure the outlook for Europe in the near term.

Experts, poverty reduction organizations and environmentalists have warned that: millions of people in all of Europe may unable to pay heat their homes this winter because of the jump in gas and electricity prices.

recent research led by Stefan Bouzarovski, professor at University of Manchester and chair of energy poverty research network concerned, found that no fewer than 80 million households in were all of Europe already struggling for their . hold homes sufficiently warm for the pandemic.

The current price spike could make matters worse, although governments have taken steps compensate higher cost of set a limit on bill increases.

Rystad Energy predicts Nord Stream 2 delays could even affect energy market after this winter, and predict certification will now be completed around April at the earliest. Eurasia Group also thinks surgeries probably won’t start till the second quarter of 2022.

That would prolong the scramble for liquefied natural gas, that is currently in extremely high demand.

“Europe may be forced to remain dependent” on An already tight liquefied natural gas market, which indicates an increased risk of a persistent high price environment by a lot of next year’s first half when Europe rises with severely depleted storage,” Rystad Energy said.

Read More: World News


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